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31-03-2005
In at least one in 20 cases where workers are awarded compensation by employment tribunals employers simply refuse to pay up, new research by Citizens Advice indicates.
The problem-solving charity says such a high rate of non-compliance by employers represents a serious threat to the effectiveness and credibility of the Employment Tribunal system as a whole.
In a report published today, Hollow victories*, it calls on the Government to change the law so that unpaid awards can be directly enforced by the state.
Around 13,000 compensation awards are made by employment tribunals in England and Wales each year and each year Citizens Advice Bureaux deal with up to 700 cases of non-payment. Where an employer fails to pay up, tribunals have no powers of enforcement. Instead the claimant has to go to court, a costly and time-consuming process without any guarantee of success.
Citizens Advice Bureaux currently deal with more than 500,000 employment problems a year, most involving workers who have been denied one or more of their statutory workplace rights and whose only recourse is to take a claim to a tribunal. Many are vulnerable and low paid workers performing unglamorous but essential tasks.
Citizens Advice Director of Policy Teresa Perchard said: “Employment tribunals are off-puttingly legalistic and increasingly adversarial, so taking a case to one can be immensely daunting and stressful, especially for vulnerable low paid and non-unionised workers. There is no legal aid available, and pursuing a claim involves a lot of time, money and energy.
“Yet all too often people go through this gruelling process and win their case only to find that being awarded compensation turns out to be a hollow victory. Their employer simply fails to pay up and there are so many legal and financial obstacles to enforcing an award they end up without a penny of the money they should have. The government has already acknowledged this is a problem. Our research shows just how big a problem. We urge the government to use the opportunity presented by the forthcoming Courts and Tribunals Bill to ensure that employers can no longer get away with ignoring tribunal rulings, and to ensure that successful claimants are not denied justice.”
Under the current system, an unpaid award can be registered with a county court at a cost of £30 so that the employer’s name appears on the Register of County Court Judgments that banks, building societies and credit companies can search when considering loan applications.
If that fails, the claimant can ask the court to use its various powers such as issuing a warrant of execution or a third party debt order. But it is a time consuming and expensive process – an application for a third party order commands a fee of £50, for example - and employers still find many ways to wriggle out of payment.
For example, a CAB in the West Midlands that had helped a woman win compensation of more than £11,000 for unfair dismissal, unpaid wages and unpaid redundancy pay then helped her register the unpaid award in the county court. But when the employer still failed to pay up – or even respond – she reluctantly decided she could not face the stress or afford the time and money to pursue the award through further court action.
In another case, an East Midlands woman sacked while pregnant and subsequently awarded more than £6,000 by an Employment Tribunal for unfair dismissal had not received a penny of the award despite numerous letters to her former employer.
A CAB in Essex reported the case of a client who was awarded £10,000 for unfair dismissal and unpaid holiday pay, but who received none of the compensation from his employer, even after registering the unpaid award with the county court.
And a Norfolk woman awarded £8,000 by an Employment Tribunal for sex discrimination and pregnancy-related unfair dismissal had not received any payment at all from her former employer.
Citizens Advice believes that provision for a mechanism to better enforce awards should be included in the forthcoming Courts and Tribunals Bill. This could allow the state to pay the award to the claimant, and then itself pursue the employer.
Notes to editors:
*Hollow victories is available from the press office or at  www.citizensadvice.org.uk
Notes to editors on Citizens Advice
- The Citizens Advice service is a network of independent charities that helps people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more information in England and Wales; www.citizensadvice.org.uk
- The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
- Most Citizens Advice service staff are trained volunteers, working at over 3,300 locations across England and Wales.
- Advice and information www.adviceguide.org.uk
- Volunteer hotline 08451 264264 (local rate)
- Citizens Advice Guide to your rights, second edition: January 2008 - over 600 pages of practical, independent CAB advice. An invaluable resource for any bookshelf - available from all good bookshops; price £11.99; ISBN: 9780141034089
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